Invest in Maldives

a guide for foreign investors

CTL Strategies recognised in 2021 Rankings of Chambers and Partners

CTL Strategies has been ranked in the Chambers Global Guide 2022, published by the Chambers and Partners. Chambers and Partners is an independent research firm that operates in 200 jurisdictions and is commonly referred to as the “gold standard” in the legal profession. Chambers deliver rankings and insight into the world’s leading lawyers and law firms.

The firm’s new ranking in Band 2 this year, marks a significant upgrade for the firm with the firm moving from Band 3 within just two years of its ranking. The Guide remarks that “the team understands the commercial reality of transactions and provides practical legal solutions”.

Recent Updates

Fourth Amendment to the Income Tax Regulation

The Fourth Amendment to the Income Tax Regulation was published in the Government Gazette on 17 May 2022.  While bringing about some notable changes to the rules governing the income tax return filing and payment obligations, the Amendment also brings further clarity to computation of withholding tax and eligibility of refunds specific to certain common scenarios.

This Advisory provides a summary of the following key areas of the Amendment, which may have an impact on taxpayers:

  • Computation of Withholding Taxes based on Provisions
  • Computation of NWHT based on Debit/Credit Notes
  • Mandatory use of MIRAConnect
  • Exemption from Return Filing
  • Computation of taxable income of Permanent Establishment
  • Exempt Charitable Organisations

Second Amendment to the SME Act

The Second Amendment to the Small and Medium Enterprises (SME) Act was ratified by the President on 10 May 2022. The Amendment revised the classification criteria of SMEs by increasing the revenue and profit thresholds. Mandatory SME registrations for new businesses were also introduced under the new Amendment.

New Criteria for SMEs

The Amendment changed the total revenue and net profit thresholds for all classifications in the manner detailed below. The criteria for the number of employees remains unchanged for all classifications. The Registrar of Companies is required to re-classify the businesses accordingly with the new criteria before 30 July 2022.

Micro Businesses

Previous Criteria New Criteria
Number of Employees 0 – 5 Employees
Total Revenue Upto MVR 500,000 Upto MVR 1,000,000
Net Profit Upto MVR 75,000 Upto MVR 250,000

Small Businesses

Previous Criteria New Criteria
Number of Employees 6 – 30 Employees
Total Revenue From MVR 500,000 to MVR 5,000,000 From MVR 1,000,001 to MVR 10,000,000
Net Profit From MVR 75,000 to MVR 750,000 From MVR 250,001 to MVR 2,500,000

Medium Businesses

Previous Criteria New Criteria
Number of Employees 31 – 100 Employees
Total Revenue From MVR 5,000,000 to MVR 20,000,000 From MVR 10,000,001 to MVR 30,000,000
Net Profit From MVR 750,000 to MVR 3,000,000 From MVR 2,500,001 to MVR 5,000,000

Automatic Disqualification for Exceeding Thresholds

  1. Previously where any of the maximum thresholds for number of employees, total revenue or net profits has been exceeded, such a business will not be categorised as an SME.
  2. However, under the new changes brought by the amendment, only exceeding the maximum threshold for total revenue (i.e. MVR 30,000,000) will result in automatic disqualification as an SME.
  3. No changes have been brought to calculations applicable to determine the categories whereby a business does not meet all criterias of a specific category. The calculations have been detailed in the First Amendment to the SME Act and the Regulation on the Classification of SMEs.

Registration Requirement for New Businesses

  1. Under the Amendment, new businesses are required to provide to the Ministry of Economic Development (the “Ministry”), the forecasted revenue and number of employees for a period of 12 months from registration of the business.
  2. This requirement, now stipulated in the Amendment, has been earlier introduced by the Regulation on the Classification of SMEs published on 9 January 2022.
  3. Upon being submitted with the forecasted data, the Ministry is mandated to classify the new businesses accordingly with the criterias.

Annual Review of Classification by the Ministry

  1. Previously, the Ministry had been mandated to review the classification of businesses annually, by the end of August each year, after considering the tax records provided by the Commissioner General of Taxation.
  2. As a new change introduced by the Amendment, the Maldives Pension Administration Office (MPAO) is now required to provide information regarding employee numbers to the Ministry. This introduces two information sources for the Ministry to conduct the annual reviews:
    • Review based on the information provided by the Commissioner General of Taxation; and
    • Review based on the information provided by the MPAO.

Effective Date

The Amendment became effective on 10 May 2022.

Photo by Sonia Nadales on Unsplash


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